Sage - A deep customer focus

Sage's analyst briefing last week had one interesting insight: the company's major focus on customer intimacy. It's a rare thing to hear of such a focus from an ERP firm.
Written by Brian Sommer, Contributor

Sage had a number of industry analysts out to Boston last week for a one-day event. This was the first analyst event they’ve had in North America in almost a decade.

While Sage has at times seemed to me to be a company that changes slowly, apparently there were a number of changes underfoot for the last few years. Customer intimacy is the biggest change.

Management gurus Michael Treacy and Fred Wiersma opined that great companies excel in one of three disciplines: Product Innovation, Process Excellence or Customer Intimacy. In the hundreds of software companies I have evaluated over the decades, 90+% of them try to be product innovators. I have rarely encountered a customer intimate software vendor. In fact, I can only recall two.

Sage is now the third. The company’s third presentation last week focused on this subject. The company has some 150+ million customer touch points/month. Their goals are to:

- Do basics really well - Seek out opportunities to go above and beyond - Create experiences that customers will share with others - Create a memory, a lasting impression, that leaves customers feeling fantastic

I spoke with a number of Sage’s top executives at this event. I spent time with the current North American CEO, the incoming North American CEO and the new Sage Group CEO. I pressed for details and insights into this cultural change. I wanted to see whether it transcended borders. I wanted to see if it was a sincere change driven from the top down.

In all of those interactions, I collected several data points that suggested the change was real. In one of those exchanges with the Sage Group CEO, I asked if Sage had moved out any personnel who weren’t 100% focused on delighting customers. I got an enthusiastic response to that question. When I pressed further to see if they’ve culled any channel partners for not being particularly customer focused, I was told that channel partner metrics were coming and, yes, they will only want customer focused channel partners.

Sage is heavily vested in net promoter scores. Wikipedia has this nice, succinct definition of these scores:

“The Net Promoter Score is obtained by asking customers a single question on a 0 to 10 rating scale: "How likely is it that you would recommend our company to a friend or colleague?" Based on their responses, customers are categorized into one of three groups: Promoters (9–10 rating), Passives (7–8 rating), and Detractors (0–6 rating). The percentage of Detractors is then subtracted from the percentage of Promoters to obtain a Net Promoter score (NPS).”

Sage’s net promoter scores are improving on average across the 22 products they measure. This focus is resulting in rising renewal rates and revenue per customer. (Both of these statistics are also rising as Sage is selling a number of cloud-based add-on applications (e.g., PCI compliant credit card processing) that are generating significant increases in customer revenue and are actually creating greater customer lock-in.)

Sage’s cloud strategy is still a work in process. The company has a few add-on cloud applications that work with several of its key product lines. Many more of these are being planned . Will the company re-work its legacy applications to become true, multi-tenant SaaS solutions? Not really. Some solutions will be offered on a hosted basis. A few will be cloud-based. Most will remain on-premise solutions with cloud-app attachments.

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